Hexxeh, the original Chrome OS on USB drive-build maker, has brought us a new build. This one does not necessitate a 4 GB USB drive, but fits on the lowly 1 GB drives many of us have lying around. So get your installation pants on and follow the instructions here: Install Chrome OS on a USB Drive.
And don't forget to download the new build here: Chrome OS Diet USB version.
I'll be sure to check it out as well, once the download link starts working... Hmm this seems familiar